Exec Chat: JNJ's Innovation Partnering Strategy Goes Broad And Beyond 'Pinpoint Intervention'

Innovation is the life blood of the medtech industry. It keeps companies growing, and even for established behemoths like Johnson & Johnson, cultivating a healthy innovative pipeline is critical for top players to help ensure they stay on top.

JNJ Innovation is the main innovation-scouting and -investment engine for the diversified health-care group's pharma, medical devices and consumer businesses. While most of the technologies JNJ Innovation decide to invest in are ultimately destined to be in-licensed or acquired by JNJ, it's all about working in full collaboration with smaller innovators and helping to drive these new technologies forward, according to Mirren Mandalia.

Mandalia, who was a practicing surgeon for seven years before crossing over to industry, leads the identification of early-stage medical devices across EMEA at JNJ Innovation. In an interview with Medtech Insight at the June 26 MedFIT meeting in Strasbourg, where JNJ Innovation sponsored the "Start-Up Slam," Mandalia acknowledged that the financial backing it provides is an important piece of the relationships it forges with external innovators. But, he said, the real value that JNJ brings is its expertise in R&D, clinical and regulatory strategy – "to drive that company to do the right R&D, generate the right data for the regulators and for the payers to get the product into the market."

Mandalia advises start-ups that might want to approach the health-care giant not to wait until they have a product ready to launch. "I'd rather speak to companies earlier because we can help shape and navigate that development pathway and provide that guidance." Even if it is something that JNJ is not prepared to invest in immediately, the firm provides these smaller players feedback on what they have to do to further develop their technology. If the start-up can deliver, JNJ might reassess the potential of that technology. "It's all about collaboration and being a big part of that ecosystem and that landscape," he said.

In this edited Q&A, Mandalia provides more insight into the workings of JNJ Innovation and marks the signposts in a changing health-care landscape that are directing the firm to go broad with its strategy.

"We're thinking broad along that disease pathway now," says Mirren Mandalia, Senior Director, New Ventures And Transactions, Medical Devices, JNJ Innovation

Q: Medtech Insight: What stage does a company have to reach to get JNJ Innovation's interest?

A: Mirren Mandalia: The full spectrum. JNJ Innovation is an umbrella group, made up of three parts. The Innovation Center, which is what I'm part of, does non-equity based investments and we focus on R&D collaborations, primarily with academic institutions and early stage companies. We also have JLABS, which is a no-strings-attached incubator model. We have a number of incubators across the world, primarily in North America, but also in Europe, and we're opening one in Shanghai next year. The technologies at JLABs are probably broader than where we are today. So we have a number of companies in these incubators that could be of strategic interest to JNJ but in a lot of white spaces. Those companies get access to JNJ expertise; there is an educational program so there is a lot of support for them around how to grow their business, how to raise financing, etc. We've had significant discussions with a lot of these companies at JLABS on how they would look like in the future, whether could they be possible investments for JNJ and how we can help them go further because their interests are close enough to JNJ's or are in areas JNJ is looking to go into. Then there is JNJDC, which is our corporate venture arm. It is the oldest corporate venture group and it invests in companies that may be further along than where I would invest because they are already raising a series A, B, or even C. So we go the full spectrum. Ultimately, we are looking at companies that we can license or acquire in the future. There is a stage where we can learn, invest and de-risk that investment further on, and also push the boundaries in all these collaborations and see where health care is going, what are the other areas we need to invest in to stay at the forefront of health care. That’s the whole model of JNJ Innovation; it's not just about how do we support the core business as of today, but what are the trends in health care where we should be thinking more broadly than we are today from a footprint perspective, then position us for the future.

Q: What would you say are the overarching trends that are impacting JNJ's decision on where to focus?

A: Mandalia: The health-care landscape is changing and moving from value-based health care to outcomes-based contracting. For that you need to think broader than just what your portfolio can deliver, but what is the overall outcome that you can deliver through a solution which may comprise more than an individual intervention in, say, the operating theater. That's where JNJ, from a medical devices perspective, would traditionally provide products to either support a surgeon with an operation or an implant to put into a patient but that's only a pinpoint intervention. We're thinking broad along that disease pathway now, so it's not just the intervention we do but what's that patient journey and where can we provide either products, solutions, technology that supports the patient, health-care professional and the payer to deliver that outcome. For example, if you have osteoarthritis, we think about the whole patient journey, from the time you have knee pain to when you need a knee replacement or a revision of a knee replacement. That's a huge journey that spans many years, we're thinking about what is that journey for the patient, what are the interventions that you can provide that patient and health system earlier on to slow the progression of disease. That's a big driver for us.

The other bit in the surgical pathway is how do we support more standardization and consistency of care delivered. Being a surgeon, I can say the surgeon is probably the weakest link from a procedure and clinical outcomes perspective. That's why recent investments DePuy Synthes has made with [French software-enabled surgical technologies specialist] Orthotaxy SAS and C-SATS, [a surgical performance management system] is a way of providing insights and feedback to the surgeons and the surgical community within the operating theater and improve consistency in patient treatment and clinical outcomes. That's some of the key drivers that we see and what we are looking to tap into. It's that variability that we are trying to standardize and improve.

Another key part [of our focus] is around the digital trend and data. Digital is great, it generates a ton of data. But what are the insights you can provide back to either a patient or health-care provider, to change the way you manage the patient and that treatment? Because that's what really drives outcomes. It's not just about having data but what you do with the data. Artificial intelligence is a big part of that. [In June,] JJDC invested in an Israeli company called Zebra Medical Vision, that leverages AI, machine learning to pre-read diagnostic scans – X-ray, MRI, CT.  – So before a radiologist sees the scan, Zebra's software can produce a summary report. The interesting thing is, when you get a scan, say a chest CT for lung cancer, you may not be looking at the cardiovascular aspect of that scan whereas Zebra's algorithms can read the scan in its entirety and say "look, these are the things we've identified" and it may not be what the physician is looking for, but it helps to identify different conditions. Again, a lot of it is improving the consistency [of that process] and the outcomes – that's the key driver.

Q: You say that JNJ is looking to get involved in the whole patient care pathway but your portfolio is largely focused on the treatment and intervention stage. How are you addressing the gaps you may have in the earlier stages of prevention and diagnosis? 

A: Mandalia: We have to understand the patient pathway to understand where we want to intervene. We have a broad portfolio ranging from medical devices to pharma to consumer. Being the largest and most diverse health-care company, we have the opportunity to tap into the patient at different touch points to deliver the value and the clinical outcomes we want to generate as a community. You're right, we are not an IVD or diagnostics company but we have to think about partnering and working with companies that can help identify these patients at the right time. We may not do it ourselves, but we'll think about how do we work with X in the community, [like with Zebra Medical], to make the right tools that enable us to deliver the outcomes we want to achieve from a solutions perspective.

Q: What are the dynamics between JNJ Innovation and a company you've invested, like Zebra Medical? What happens after you've signed the deal?

A: Mandalia: It depends on the nature of the investment we're making. Some products or solutions we are investing in, they are very close to our business today. And we know clearly how that will fit into our portfolio in the future. With other collaborations, we might be providing more insights and guidance to support that company with the view to licensing or acquiring their technology in the future.

Q: What are your top three items on your checklist when you are technology scouting?

A: Mandalia: The key thing we look at is how innovative is that technology in terms of whether it is really going to change the way you manage health care in the future. So it has to be clear what the unmet need is that you are trying to address with your technology and how are you different from the rest of the competition out there. That’s key. The other bit to this is, have you got the data to back this up. Data is currency from a payer's perspective or regulator's perspective and it is becoming increasingly important that you have a clear data strategy. The other two important things are IP and management. You've got to have a strong IP position to defend your product portfolio. And from a management perspective, you need people who are experienced. I wouldn’t go as far as to say we only back companies that have a management team who have done it before. But you want smart people who are thinking about what the key challenges and hurdles are that they need to overcome during that development path and just be aware of what needs to be done and bring in experts when they need to. They don't necessarily have to have that expertise in house today, but know where they need to navigate to deliver on that.

From the editors of Clinica